ppt课件-corporate finance lecture note packet1 the objectiveand（公司财务注意packet1 objectiveand讲座）.pptVIP

Applied Corporate Finance Aswath Damodaran What is corporate finance? Every decision that a business makes has financial implications, and any decision which affects the finances of a business is a corporate finance decision. Defined broadly, everything that a business does fits under the rubric of corporate finance. The Traditional Accounting Balance Sheet The Financial View of the Firm Tale of two companies… First Principles Invest in projects that yield a return greater than the minimum acceptable hurdle rate. The hurdle rate should be higher for riskier projects and reflect the financing mix used - owners’ funds (equity) or borrowed money (debt) Returns on projects should be measured based on cash flows generated and the timing of these cash flows; they should also consider both positive and negative side effects of these projects. Choose a financing mix that minimizes the hurdle rate and matches the assets being financed. If there are not enough investments that earn the hurdle rate, return the cash to stockholders. The form of returns - dividends and stock buybacks - will depend upon the stockholders’ characteristics. Objective: Maximize the Value of the Firm The Objective in Decision Making In traditional corporate finance, the objective in decision making is to maximize the value of the firm. A narrower objective is to maximize stockholder wealth. When the stock is traded and markets are viewed to be efficient, the objective is to maximize the stock price. All other goals of the firm are intermediate ones leading to firm value maximization, or operate as constraints on firm value maximization. The Classical Objective Function What can go wrong? Who’s on Board? The Disney Experience - 1997 6Application Test: Who owns/runs your firm? Look at: Bloomberg printout HDS for your firm Looking at the top 15 stockholders in your firm, are top managers in your firm also large stockholders in the firm? Is there any evidence that the top stockholders in the firm p